The RBNZ joined the party today, jerking the NZD/USD market that was leaning toward a shock cut from a central bank who has never been shy to go against the general consensus in the past.
The Kiwi immediately jolted pretty obviously to the upside as the market was forced to reprice from its expectations. Markets, like Chinese commodities traders, love a punt too!
Look at these mad punters. They love it! #CL_F 😂
— Dane Williams (@danewilliamsau) June 8, 2016
The bank is worried about the house price boom in the major cities… well Auckland, stoking inflation. Certainly a different narrative to elsewhere!
With this issue now being communicated, Forex markets will start to price out and near term rate cuts from the RBNZ and the higher NZD/USD could open up a whole new range of problems for Wheeler. This one will be interesting.
In yesterday’s Wednesday Wrap, we spoke about how EUR/USD may interpret Draghi’s stimulus program being kicked off this week. The ECB’s corporate bond buying program kicked off with a bang, pushing yields to twelve month lows as the bank soaked up liquidity.
As you can see above, EUR/USD has been coiling on the hourly, into a longer term resistance zone that if you’ve followed this blog before, will be on your chart. Markets just aren’t sure how to interpret Draghi’s stimulus where a central bank tries to act as a private bank.
For now the technicals are holding but the lack of moves highlight the uncertainty around the program.
What’re you watching or trading this relatively quiet week on the Forex calendar? Let us know with a comment over on social media!
On the Calendar Thursday:
CNY Bank Holiday
EUR ECB President Draghi Speaks
USD Unemployment Claims
CAD BOC Gov Poloz Speaks
Make the switch to true ECN Forex Broker Vantage FX today!
Dane Williams – @VantageFX
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